Currently Not Collectible

"Currently Not Collectible" (CNC) status is an important concept in the field of IRS tax resolution, which can provide significant relief to taxpayers facing financial difficulties. Here's how you might explain it to a prospective client:

1. Definition of CNC Status: CNC status, also known as Status 53, is a designation the IRS can apply to a taxpayer's account. This status indicates that the IRS has determined the taxpayer currently does not have the financial capacity to pay their tax debt.

2. Qualifying for CNC Status: To qualify for CNC status, a taxpayer must provide substantial proof that paying their tax debt would create financial hardship, leaving them unable to meet basic living expenses. This involves a detailed financial analysis and submission of financial information forms to the IRS.

3. Application Process: The process generally involves submitting a Collection Information Statement (Form 433-A or Form 433-F) to the IRS. This form details your income, expenses, assets, and liabilities. The IRS reviews this information to determine if you can realistically pay your tax debt.

4. Effects of CNC Status: The IRS stops all collection activities while your account is in CNC status. This includes halting levies and garnishments. However, it's important to note that the tax debt is not forgiven or erased; interest and penalties continue to accrue.

5. Periodic Review: The IRS periodically reviews the financial situation of taxpayers in CNC status. The IRS may remove the CNC status and resume collection activities if your financial condition improves.

6. Tax Liens and CNC Status: The IRS may still file a tax lien against you even while your account is in CNC status. This is a public record indicating the government's legal claim against your property for the tax debt.

7. Long-Term Implications: If your financial situation does not improve, your tax debt may remain in CNC status until the statute of limitations on the debt expires. This is typically 10 years from the date the tax was assessed.